Gold firms on softer dollar, hopes of US-Iran talks resuming

Gold prices ​gained more than 1% on Tuesday as the U.S. dollar weakened, while ‌hopes of a resumption in U.S.-Iran talks also supported prices by easing inflation concerns.

Spot gold was up 1.5% at $4,808.69 per ounce by 11:31 a.m. ET (1531 GMT). U.S. gold futures rose 1.4% to $4,833.10.

Negotiating teams ​from the U.S. and Iran could return to Islamabad this week to resume ​talks to end the war, sources told Reuters, after the collapse of ⁠weekend negotiations prompted Washington to impose a blockade on Iranian ports.

“The direction of ​the gold market will depend on how the talks go in Pakistan and what kind ​of progress is made heading into the weekend. If we see positive news, metals will continue higher,” said Bob Haberkorn, senior market strategist at RJO Futures.

“Lower dollar, lower oil right now is helping ​gold out, being that when the war started, there was a rush to ​cash and a concern about being able to accumulate energy supplies,” he added.

The U.S. dollar drifted lower ‌and ⁠oil prices fell. A weaker U.S. currency makes greenback‑priced bullion more affordable for holders of other currencies.

Data showed that U.S. producer prices increased less than expected in March as the cost of services was unchanged, but surging energy prices because of the war with ​Iran were fanning ​inflation pressures.

Despite its role ⁠as an inflation hedge, gold becomes less attractive in a higher-rate environment because it offers no yield.

Traders are now pricing in ​a 28% probability of a U.S. rate cut this year, compared ​with expectations ⁠for two cuts before the war.

“As long as the market does not begin to seriously consider a rate hike by the U.S. Federal Reserve – there are no signs of ⁠this so ​far – the gold price is unlikely to fall ​much further,” analysts at Commerzbank said.

Among other metals, spot silver rose 4.7% to $79.12 per ounce, platinum gained 0.9% ​to $2,088.13, while palladium inched 0.2% lower to $1,571.02.